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Jakarta Post

Banks suffer liquidity problem as infrastructure projects soak up funds

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Wed, November 6, 2019   /  02:23 pm
The Jakarta Post Image
Workers stand on an under-construction pillar of the Cimanggis-Cibitung toll road over Jl. Cibubur Alternatif in Bekasi, West Java on April 19. (JP/P.J. Leo)

Many banks, especially small and mid-sized ones, are suffering a liquidity problem as a large part of the funds in the banking system are being used to finance infrastructure projects such as toll roads, an Indonesian Chamber of Commerce and Industry (Kadin) official has said. Kadin’s deputy chairman for monetary, fiscal and public policy, Raden Pardede, said that the country’s massive infrastructure projects use a large amount of the money in the banking system instead of raising funds by issuing bonds, as has usually been done in the past. "The sources of funding for infrastructure projects should normally come from the capital market, not banks," he stated during a forum on bank liquidity challenges in Jakarta on Monday. Raden explained that the funding for infrastructure projects should ideally come from the capital market, such as through debt papers o...